NEW YORK - When stocks are volatile, conventional wisdom says to stay the course. But what if you have tuition due or a pending home purchase and you just really need to cash out?
Eighteen months to a year is ideal, but sometimes that can stretch longer. Financial planner Erika Safran, who has her own firm in New York, has clients who have kept cash sitting around for two and a half years now, waiting to find their dream home. For the most part, if you want to minimize capital gains, sell the stock with the least embedded growth.
Consider selling bonds at the moment instead of stocks, said Bill Northey, senior investment director for U.S. Bank Wealth Management. For that matter, look at alternatives like a home equity loan or portfolio line of credit to avoid selling altogether, Northey added.Even with Monday’s drop of more than 760 points of the Dow Jones Industrial Average, stocks were still up 15% for the year as of Tuesday, said Northey, so it is not actually such an inopportune time to sell.